tv The Kudlow Report CNBC May 17, 2013 7:00pm-8:01pm EDT
froth we got, i say stick with it. do not be cashing out yet. you do have some time. we can go higher. like i said, there is always a bull market somewhere. i promise to find it for you right here on "mad money", i am jim cramer. i a will see you monday. good evening, everyone, i'm can you do lie, this is "the kudlow report." steve miller found himself on the enof a capitol hill grilling today, apologizing for what he called mistakes, still denying the agency targeted tea party and conservative groups for idea logical reasons. at times, it got a little tense. take a listen to this. >> is it illegal what they have done? >> it is absolutely not illegal. >> it is not illegal what the irs has done. >> so let me understand the question, what is your statement as to what is illegal?
>> do you believe it is illegal for employees of the irs to create lists to target individual groups and citizens in this country? >> i think the treasury inspector general indicated it might not be. others will be able to tell na. >> what do you believe? >> i don't believe it is. >> there were empassioned statements by pennsylvania's mike kelly. >> i just think the american people have seen what's going on right now in their government this is an outreach and i yield back. >> also, importantly, we learn from the treasury inspector general today that the deputy secretary, was told about the i.g. audit last june 2012 before the election. so did the irs do itself any favors? today's hearings?
today we begin with bob cos is that, the national review. what itself the headline here in. >> the treasury knew in june of 2012, they may be targeting conservative groups and they didn't tell the public. that's the headline, larry. >> do we have any sense, i will ask a bunch of people, do we have any sense, let's be specific, deputy treasury secretary neil roland a presidential appointtee. do we have any sense what he did with that information he got in june of 2012. as in, did he walk across the street and give it to the white house counsel? >> larry, i was talking to a treasury official and told me neil roland did not talk to the obama after russell george told neil roland about the investigation. that's their line right now. i talked to congressional republican, they will push this issue and they want to know about the i.g. report and the
i.g. investigation. >> do you believe your treasury source? this is one of those stories, especially to the irs, everybody lies. i'm not willing to make that statement about the treasury, but a lot of people have not told the truth. >> that's exactly right, larry. no one on capitol hill seems to be buying what stephen hill said today. the deputy secretary won't. the secretary will have a lot of questions to answer when he comes to capitol hill next week. if the obama administration knew about potential corruption at the irs, and they did not talk, they will by a cuesed of playing politics. stephen miller today was defiant. >> very good, robert costa as always, time for your wrap-up. our next guest chief deputy peter roscum of illinois had heated exchanges. here's one example. please listen. >> what day did the conversation take place? >> i'd have to look back on my notes on that, sir.
>> you have notes on that? >> i'd have to try to find them. >> why did you say you had notes if you don't think you have notes. >> sir, please. please. >> do have you notes or done you have notes? >> i don't know. >> i don't know. joining us now is congressman peter ross, cum, the interesting thing about this is everybody from the irs lies to congress. all the main people have lied to congress. in some cases for a couple years. so you're asking this guy miller about notes is a ge main and relevant question. >> look, this guy today, larry, completely underperformed. here's, if i were the irs, this is what i would do. i would come into congress and say we mislead you, we apologize. we sorted people, we targeted them. we apologize, here's who dido did it. here's how we will fix it in the future. all of the air comes out of this. instead, what does commissioner miller do? he denies magazine leading
congress. he parces at best. he doesn't like the characterization of the word targeting even though the inspector general uses it 16 times in their report and, look, there are more questions than answers that came out of this hearing today and it's not helpful and i was jarred, actually, i was jarred when he said that he thinks they had the legal authority to target americans. that's unsettling. look, the country is the not going to stand for it. >> well, don't you think this whole thing was a coverup? that's what they wanted. now they had to break it open because of the i.g. isn't that a coverup? isn't is that where it's going to lead? >> look, that's clearly the direction this is all going. in other words, there was a decision at some point in the internal revenue service to target conservative groups. that happened, not withstanding all the parcing the irs came up with. you have to ask the question, who created the environment to
please superiors and who were the superiors they were trying to please. that's where we need to get further into this. this whole notion of planted questions with the ada is an absurdity. >> go with that, this lois learn learn er. she, they had deliberately a plant in the american bar association so lerner could break the news. now, what did the guy miller have to say about that? that's about as crooked as it gets. >> it was pathetic. i mean, i was embarrassed for him. so he admits he's involved in this scheme with lerner to come up with this plan. why they didn't come forward and address congress? he said, we tried to get on the calendar. i mean, it's like, it is completely 81 welling. so, look, the irs is eroding its confidence with the american public. it's got no credibility right now with the united states house of representatives on a
bipartisan basis. i mean, there were drots that were sort of defending a little bit. but it was not a full throated defense. they were very critical of how the irs has handled this. now, moving forward, i think it really makes the case to reform the whole tax code. take the power and the discretion and the authority away from these people that they hide within a complicated tax code. >> all right. i think we have another tape. let's take a listen to what former irs commission doug schulman told your committee in march of 2012. >> can you give us assurances the irs is not targeting particular groups based on political leanings? >> yes. i can give you assurances. as you know, we pride ourselves on being a nonpolitical, nonpartisan organization. there is absolutely no targeting. this is the kind of back and forth that happens when people apply for 501(c)(4) status. >> that's what's so great about these stories.
every official lied. one way or another. this lois lerner you mentioned before, she got set up. she may have lied four times to the oversight committee. but i've called for an independent special council. let's bring in jay sekelow now. the chief council for american law and justice. good to see you, thanks for helping us out. >> good to see you. >> listen, my friend, if you don't have a special council narrowly defined to deal with this problem with subpoena power, they are never going to get the truth from anybody. they'll never get to the truth because these irs people lied. >> well, you don't feel comfortable having the fbi investigate the irs? i mean, this whole thing is absurd. of course the president will push back on special council which is exactly what takes place here. the reality, the lying of the irs, the hypocrisy to set up questions followed by these absurd performances today should make everybody, right, left,
center, stand up and notice, we got a serious problem. we have a government agency, probably one of the most powerful agency in the country that affects the lives of every day americans. they are completely without a rudder and causing harm for the american people. >> jay, you tell me, i'm not the lawyer. if neil woman, who is an obama apointee, a big job. the deputy secretary of the treasury, if he was told about the audit, not the conclusions, but he knew about the audit in june of 2012 before the election, can he be subpoenaed by a special council to say what he did next? who he talked to? did he go across the street to the white house? >> absolute. >> i and talk to the white house general council, did he talk to the chief of staff? i want to know what he did with that information. >> well, i mean, of course the special council would have the right to that information.
take eight step furtherment it's hard for me to believe when the white house counsel's office was notified nobody bothered to tell the president, by the way, in a few day, there will be an investigation showing you were targeting prior to 2012, nobody bothered to tell the mr. president of the united states. we don't know what he is thinking. his answer to the question when he was asked specifically by a reporter, what he knew what the white house knew. he started talking about the inspector general's report, not whether knowledge in the white house was known about this. it is incomprehensible to me, inconceivable no one from treasury. i worked for chief council's office of the irs, in fact, tax exempt was one of our clients. out of law school. the idea that this was reported by rogue agents, there is a lot of lying, we need to calm it what it is, it is lying under oath. i think in some of these cases, take it a step further, the president needs to answer the question he was asked, did anybody in the white house know
what was going on here? >> the key. >> knowing the way this is set up, if way this operation set up, you can put him under oerkts to me, you got to have more pressure than that. the other thing i want to ask you about which is driving me crazy, so the white house is putting the guy in from omb, werfel, whatever his name is. he is going to run the irs for four months. do you realize that, by his own admission, may 22nd and will leave at the end of the fiscal year, september 30th. now, i ask you, can anybody possibly get to the bottom of this rat's nest in the irs in four months? mind you, they got to run the agency while they're trying to conduct an investigation. no one is going to conduct an investigation unless it's special council. four months. it's insanity. >> well, it's an incredibly big challenge right now. that is to get to the bottom of
it. there was an important distinction made today by congressman tim grimp from arkansas. he pointed out. he said, look, this is an inspector general's audit. it wasn't an investigation. it was an overview and tfrls not a deep review. it was not an investigative document and the inspector general, when asked, was not forthcoming. he is not able to disclose if he's doing an investigation. congressman grimp came to his own conclusion and said, i think you are doing one. look, to jay's pointed and your point, there are more tools the ways and means committee has, there are tools that others did of committees of the house has. when it all comes down to it, these answers, they're going to come out. because the american puck u public is demanding they come out. they will be satisfied. >> i think they come out a lot better if you have a designated independent special counsel. i really do. jay, real quick, we are running out of time. i want to know who quarterbacked this whole operation?
i want to know who did the targeting? somebody was quarterbacking it. maybe this sarah hall inc.er or engram, who has now gone over to the obamacare. somebody quarterbacked this, jay. >> absolutely. >> that's what we have to find out. to me, if you are not subpoenaed and put under oath at the risk of perjury or criminal offense, we will never know. we will never know. >> i think you are absolutely correct and to take eight step further, today, acting commissioner miller knew nobody, knew no names, knew no one involved in this. i got the letters from the 27 clients that i represent. i can tell you who these agents are. in fact, we will probably release that monday. this is absurd. everybody working on these cases know the agents involved. this wasn't some rogue agent in cincinnati. >> heck, no, this is cincinnati, washington. i heard from a latino group last night. >> yes. >> they are down in austin, they were operating this stuff. anyway, i got to get out of here. you are both great. as always, thank you for helping
us. thank you for coming back. now, let's turn the switch a little bit and look at the stockmarket. the rally came back today with a vengeance. more and more evidence the bulls have more room to run and the question is, this is a little tongue and cheek, but are the obama scandals actually good for stocks? you know why? maybe nothing bad will happen in washington. we have seema mody and art last and speaking of all time high, the jackpot for the lottery power drawing is tomorrow night, it's creeping over the $600 million mark. we already know the winner, you heard right. we're going to know. we're going to tell you in just a few moments. don't forget, free market capitalism, not lottery tickets is the beth path to prosperity. i'm kudlow. we'll be right back. .
strategist dan greenhouse, art last of last investments and cnbc's own seema mody. i want to start with you. this will sound tongue in cheek. it's a serious question, are the obama scandals good for stocks? >> they're trick for stocks, larry. i mean, we need a change in economic policy, there is no better change than if we take the senate in 2014, the presidency in 2016, that would be phenomenal for stocks. this administration is bad for the economy, it's bad for stocks. when they trip, especially at the irs, larry, it just doesn't get any better than that for the future of the country. >> dan, i'll let you pitch, i'm add if they're all engrossed in these scandals, they can't do anything bad in terms of policy. >> listen, i'm all for washington doing as little as possible. with all due respect to the great art lafr, it's up 140%. we can say what we want about
ben bernanke destroying the dollar and so on. the fact remain, art is not saying that. i'm obviously being tongue in cheek. the fact is the stockmarket is up 145% with what some would call disastrous economic policies. so i disagree these scandals are somehow good. it means republicans have a better chance. >> what about this big story, seema, ten id profits rising stocks, that was in the wheat -- ten tepid profits. >> sure, earnings very important for this market. they have in some ways come in less than expected this past quarter. but i think at the end of the day, if you want yield, equities is the only game to play. so uconn to the see new money coming to work. the stockmarket moving higher. >> earnings have been the backbone of this whole thing, dan. you have grown, 140%. >> give or take. >> almost exactly the same as the s&p ride. earnings rise 5% in q1, why is that so bad at this stage of the
game? >> it's not earnings giving people heartburn, it's the revenues. >> i hate this argument. >> listen, companies can fenagle the bottom line. we are seeing that, obviously, through enormous buybacks. it's harder to play games with. what is giving people pause, the market continues to rally higher on multiple expansion, when in theory, you want earnings growing faster. >> how can you expect the revenue to be great when you have a gdp of 2%? >> that's it. you trapped him into it. you absolutely trapped him. >> i don't think so. >> listen to this, arthur, seema is right. we had a 2% economy the worst recovery if mod tern times. yet, we had this massive, massive stockmarket rise. earnings are more important than the 2% economy than the slower revenues. businesses they're entrepreneurial. they belt tighten. earnings are the real return on
capital. why shouldn't they be more important in the. >> of course, they are. they are much more important. gdp and let's say hiring lawyers for divorce, probably doesn't help stocks much. it's profits. it's profits after tax and it's the capitalized economic profits that is the stockmarket and what you are seeing now with the irs, not just anti-obama, but we have a real problem with tax, larry. when the irs comes under attack like it is right now, it's really hard for them to raise tax rates the way obama wants to do on individuals in the highest income brackets. it's all a game. it's all a shell game there with the irs. that's why i think it's good for the u.s. economy. >> i think it's a big rat's nest. we will keep that for the others. >> that's what it is. >> you recovered from seema's body blow? >> i think it's fair. >> you zapped him right. >> but you had the exact rebuttal that i sort of alluded to, which is the recovery has been terrible economically. >> right. >> yet the stockmarket is up
145%. so this idea we should somehow cite the slow right of gdp growth as an inhibitor to equity performance has been proven by three-plus years. >> why cant this go on? i know there are pullbacks. i'm saying, why can't this be a cycle. we had four-years plus, why can't it go on for a fifth year, a sixth year? >> i are rope art in and say, in theory to the extent enflation doesn't pick up, thebed feds could be buying bonds until the end of time. art, disagree with me? >> i'm not going to disagree. i think there is an end game coming along. they could do it for a long time. they have done it for a long time. they don't ever really get in trouble unless that deficit starts to get larger. once that starts happening, then i'll have trouble. >> we got to get out. i hate to say this, i don't want to be a cynic. but scandals in washington mean really no policy measures and
probably no policy measures are a very good thing and if the scandal leads to a republican senate in 2014, that could be corporate tax reform, that could be keystone, that could be unlocking federal land for joy. that could be one heck of a bullish scenario. think about that. >> it sure is. what is neat, larry, have you heard so many discussions about abolishing the irs as in the last two weeks? >> anti-going to happen. >> that would be a low rate flat tax. you could go a long distance. >> you could reduce. i got to get out on this segment. >> exactly. >> dan greenhour, thank you. i think he has recovered. art last, seema mody, seema is tough. up next, seema, as we promised, she will tell us the winner of tomorrow night's big $600 million-plus powerball jackpot. she apparently knows. you got to stick around to find out.
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we know the winner is the government t. states take 50% of what's taken in. the federal government will get 40% of the winner's share, around $150 million in this case. depending on the city and state where the winner live, it could be a few million more in taxes. let say one person wins and takes a lump sum payout, the winner will get right around $200 million after taxes. >> i'd take i. i think you are right. the real winner the government. >> did you get a ticket? >> i won't do it. it's a kind of principal. i think it's awful. it's a matter of principal. >> that is working against you. >> thanks very much. for years the kudlow report has been calling on washington to reform corporate taxes and get the billions of dollars of cash parked overseas back into this country. now, apple ceo tim cook is trying to get this done. good for him. beef got that story coming up next. (phone ringing)
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welcome back to "the kudlow report." i'm larry kudlow. with all the scandals surrounding president obama, it looks like he cannot manage the executive branch and his dream of a democratic house in 2014 may be going up in flames. former governor howard dean an communications director sean spicer, they're going to debate that in a few moments.
later, get this, some people think it's a bad thing the deficit numbers are coming down so far and so fast. we're going to try to straighten them out with some facts and free market logic about budget deficit. now, everyone focused on today's big congressional hearing about the irs. but there is another big hearing next week where apple ceo ted cook will be the headliner. seema mody joins with us those details. >> that's right. tim cook will testify on permanent investigations tuesday. lawmakers looking into the practices some u.s. corporations use to shift profits made here overseas to pay less in taxes. apple adamant saying it doesn't do this, holding $102 of it's billions in cash overseas because it's made there. remember, apple gets 66% of its sales overseas. if the 102 billion is brought back to the u.s., it faces additional tax, typically the difference between the other country's tax rate and the u.s.' 35% corporate tax rate. in interviews with other
outlets, cook says that corporate rate is too high. cook telling the washington post, we're not proposing it to be zero, i think it has to be reasonable. >> great stuff. very important. so, would tim cook be the one that finally brings a decent tax reform to the rest of the country? let bring in dean garfield, ceo of the industry counsel, he has been working with counsel an tim cook. art last is still with us. art laffert is still with us. let me ask you, president obama wants to tax overseas profits. i think tim cook is dead right. i'm very pleased to see him go for this. isn't the cards stacked against him? >> they may be. but it doesn't mean we shouldn't be looking at it. the last time our tax reform was in 1996. the last time the movie was "ferris bowler. "we have a problem here. the problem begins with an a. it's not apple.
it's our ain't kuwaited -- anti-anat thequ ated system. >> what has caused tim cook to be so visible about this? i'm impressed with him. i say go for it. water caused him to be so visible? >> well, in part, it's because there is a senate hearing held by senator levin around these issues. truth be told, it's the tech sector and apple have been at the forefront of the innovation and markets and so they're feeling the brunt of an antequated system. you will talk to laffert. senator levin's hearing is to present a laughing curve. it has nothing to do with revising the code. instead, focusing on one company where it shouldn't be. apple pays over $6 billion a year in taxes. >> all right. >> they've done nothing wrong. like much of the tech sector,
they're trying to reform the system rather than focusing on isolating particular companies. >> all right. art laffert. what would happen if we could bring the $100 billion home from apple? >> they should come home from apple. not at the u.s. tax rate. i think tim cook is perfectly correct. they should be taxed at 0-rate, larry. we have this global taxable taxation w. rethe only xen country that does that, in ireland, the tax rate is 12.5 morris, why should american companies pay 35% in ireland when the rest are paying 12.5%? it puts ut in an enormous disadvantage. it's plain wrong. i do love his reference to ferris bowl beuler, by the way. >> almost two-thirds of apple sales is overseas.
that's the reason the money is over there. >> right. >> they're taxed already over there, that's my question. >> yes, shouldn't be double taxed here. >> why should they be double taxed here? >> shouldn't be. >> shouldn't be should be? >> shouldn't be. the real option is no longer, you should never tax profits. you should tax value added. it should be a low rate. we have the highest tax rates and one of the lowest revenues because we have a lousy system that taxes swefl successful companies and subsidizes lowser. we want to go to value-added for companies, they are proposing legislation that would do th. it is rare for tim cook. he is known for leading the tech company in some ways at the forefront of the inno vacation. not seen as a company that gets mixed up with policy and matter information washington. so it will be interesting to see if tim cook can be instrumental in that way when he goes next
week. >> dean garfield, mr. cook didn't come out and say let's have a 25% corporate tax rate. will he just be that blunt about it? will he come equipped with a specific plan? >> i think he will be very drevenlth hopefully -- be very direct. hopefully, this is long overdue. by having tim cook here, he can be a catalyst for change. >> what would you tell him to say? give him some advice. >> i would him the say a -- >> what would you tell him to say? >> i would tell him to say we should have a u.s. tax buys an american companies should not have to pay taxes on foreign profits. they should come back tax free. they're doing nothing wrong whatsoever except spreading good economic returns for american-based capital. >> as much as i agree with you, the obama administration the president said this time guite fer said to me -- guitener said
it's a loophole. >> everything is a loophole to them, larry. we should have a low rate flat tax and be done with all this irs fawn sense. >> canada is 15% corporate tax. >> sounds great perfect. >> dean, what do you think? >> the proof is in the pudding. the countries that are moving to lower rates in a territorial system or at least a market-based competitive system are seeing the benefits of it through job creation and attracting new businesses. we should do the same. >> the higher tax rate hasn't been good for the corporate bond market. apple went to the debt market to raise money to fun its enhanced apple allocation program. it didn't want to bring that money back into the u.s. >> it was cheaper to pay whatever 2 and a quarter percent on the bond instead of a 35% corporate tax rate bringing it home. >> more tech companies are expected to do the same. >> what a waste. we need the money here to start building, investing, creating jobs. thanks. we got a little more work for art laffer later in the show.
coming up, irs, benghazi, the a.p. phone records, so many scandals swirling around president obama. is it his dream of a 2014 house victory going up in flames? former governor howard dean, republican party communication, sean spicer, they will debate that prop six next up on "kudlow." changing the world is exhausting business. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. all your important legal matters in just minutes.
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the obama administration remains on the defense tonight. they're engulfed by four political scandals the irs targeting of conservative groups. secret snooping of a.p. phone records, the revisions of the now famous benghazi talking points and they have lost track of terrorists in their witness protection program. it's a rough week for the president. it's an understatement. contributor and dnc former chair howard dean. we welcome back sean spicer. communications director of the republican party. i think one consequence is that the president's dream of a democratic house in 2014 is going up in flames.
>> all right. i think you probably know better than that, things could change, turn around on a dime t. benghazi politics has been pushed by the republicans for a long time. it has no traction. it doesn't have any notice. it never did. it didn't have any before the election. the irs is probably not going to end up at the president's doorstep, either. we will find out more about that. we don't know a lot about losing the track of terrorists. my understanding is they didn't lose track. they failed to put them on the no-fly zone, which i think is serious enough. we don't know what the a.p. stuff is. so i think to call all these things scandals is a little on the silly side. my guess is the president weathers this and two or three weeks from now, something else is on the headlines all the time. the big problem is here since they voted down healthcare for the 27th time, there is nothing else to write about. >> this is interesting. larry, look, if i can just, governor dean was the chief executive of the state. he foes very well that you are judged by how you lead and what
you get done and when there is a lack of, when all of these things are going on and there is more other smaller issues occurring easy well. the question has to be asked, where is the leadership? where does that proverbial buck stop? is there even a buck? what is going on, we have a common thread. no one is in charge. it's a bunch of finger pointing, i'm not in charge, nothing is going on. i think that narrative is catching hold with the american people that there is a serious problem in the administration within it comes to claiming, being able to move the ball forward when they can't tell you where the ball is. >> we'll see what the poll numbers show. i am sure somebody will do a poll the next few days. when you have a senator talking about impeachment of the president, that makes the republicans look foolish. it takes away their credibility. can you criticize the president for quote/unquote lack of
leadershipment. i have been in a lot of campaign, i never once seen that work. they are anti-this, anti-that. 37 times they voted down the healthcare bill. so they're not a credible alternative right now. so let's see, i'm perfectly willing to say, let's see what the polls say. >> this isn't about winning an election. we had one. we don't have another one for three years. this is about issues that are important to the american people. benghazi isn't about scoring political point. >> it certainly is. >> it's about policy. the irs is about making sure -- >> benefit zbaez a laughing joke. >> more americans died serving this country. four americans died, that's not a joke, sir. that's not a joke. >> the blaming of the president for that is a ridiculous joke. the american people. you have been beating on this a year. i don't understand why you don't give up on this. nobody believe there was a scandal. >> because, sir -- >> nobody believes -- the president released all the evidence. >> this is ridiculous. >> this is silly. >> one at a time.
>> i would say each one of tease questions, it's not like it's been hanging around for a year. there are serious questions being asked about who knows what, where, when. >> none. >> really? >> it is totally made up nonsense. >> let me just jump in here. >> it's never been clear what happened with benghazi, this is ridiculous. >> with all due respect -- they could use your service, because there is a lot of concern about the time line, who knew what when, when talking points were written and why. >> the president released hundreds of pages o all sorts of things, this is nonsense. the only reason, i think, look, if you want to keep talking about benghazi, it's great. it makes the republicans look like idiots. >> i have a problem. with all due respect the last time i checked, most of the press core wasn't on our side. when you are talking about us talking ab it. i think the legitimacy of these organizations when asking important questions. >> hang on, let me make one broader point governor dean, i
will address it to you. i think you have a problem with benghazi, maybe are you right, maybe you are wrong. but you got all these things happening at once. by the way the irs is a hated action. its corruption is going to be front paige news. here's my.. the president keeps saying he didn't know about this stuff. with respect to the irs, he said he didn't know about it until he read it in the newspaper. you are getting the impression, howard, that the president cannot manage the executive branch of the government. and i think that puts him in a very difficult position. >> i don't believe that and i don't think the american people believe that, which is why i said, let's wait for ten days and see what people think. i think you are wrong. obviously, this is a big talking point of the rnc. let's see who is right. i think the american people have more common sense than the inside of the beltway people who keep pushing tease stopping. >> here's the problem. i would say this, with respect to the irs, this isn't something we made up.
they came out, admitted it. almost every hour that goes by, the scope of this scandal widen, both in terms of who was involved in it. who was targeted. because every hour we hear another group or individual saying i actually had this happen to me or here's the letter that was presented to me. as far as who knew what ghoft, we were hearing in the last couple hours, more and more people were notified of this a year ago. this is not something that anyone in the republican party made up. the irs has admitted to knowing this. the question that still exists is who knew what when, how far did it go? why were they doing this? those are you'll very legitimate questions. i don't think, frankly, governor dean knows. at some point we will have a republican administration, hopefully soon. we wouldn't want that government targeting anyone on the left. so i think this is something that all americans should be concerned about and hope that we don't have this kind of action from the quote/unquote nonpartisan civil servants. >> i agree with that. i think people are concerned
about the irs behavior. i don't think it tarnishs the president. i don't. the irs has been an abuser for a long time. in fact, they looked at the naacp for a while. so the fact of the matter is, the irs doesn't always behave the way it should. there is only two political appointtees in the entire irs and i think that the -- >> governor, let me ask you a question, in all seriousness, when have you folks in the administration top democrats including, senator schumer an senator baucus, talking about high ranking folks in your party saying they are illegitimate, terrorists, tea baggers, there is clearly a sense that i believe can occur when people say, see, we're being told to go after these people, they're not legitimate, we are doing right by the leaders. >> i disagree. >> i think those are serious questions. >> i think the fundamental problems are when citizens united was passed and opened the door for all this nonsense and
checanery, which is my opinion on both sides the rules became unclear. i think it was ill advised for the irs to do what they did. i don't think unlike president nixon who did from the white house targeted groups. that is not what's going on here. this is nonsense, foolishness. a lot of people ought to be fired. i don't think it's a reflection on the president at all. >> they weren't targeting all groups, only conservative groups. >> i think that was wrong. >> with all due respect, we don't know. >> i got to get out. what we know. >> you haven't answered those questions. >> what we learned today, governor dean, you may be right. sean, you may be right. what we learned today is that the treasury department, senior deputy, i'm sorry, the deputy secretary of the treasury was informed over a year ago about the inspector general's audit of the targeting.
that's what we learned today. now, the question is, those are all obama appointees. the question is, do they jump fence to the white house or does it stay inside the treasury and the irs? that is a huge issue. >> if it turns out to be true, larry, they have to leave. >> i understand. we will have a discussion. it's one of the biggest things that popped out of the hearings today. thanks to governor doon an sean spicer. can you believe, there are some people out there that actually worry the big did you get deficit de reductions last week, this budget cutting will send it back into recession really? budget deficits? let me get to the bottom of that with art laffer. .
the budget deficit is 4% of the gdp this year. only 4%. that's compared to 7% last year and 9% in 2010. however, some economists say deficits are being cut too vast. it could, therefore, lead us back into recession. i think he's out of his mind. what else is new? let's see what my pal art laffer has to say about that? a bad thing? the deficit is coming down? >> i think it's great the deficit is coming down, government taxation melton freedman said, it's true, you can't spend yourself into prosperity. if you look at government spending as a share of gdp. it tracks growth almost exactly. having the deficit come down is
wonderful news. >> all right. so if people are saying this fiscal restraint is like 1936-1937, all right, where we had a recession inside a depression. yeah, i think that's a lot of gar back. i'll tell you why, i want to hear you first. >> well, the taxes went up through the great depression. the way the world works, it outlines it exactly, all these people in the great depression have missed the tax variable totally. bernanke, even milton freedman missed it in the freedom of the united states. it's taxes that really caused the economy to slow down and cutting taxes in aggregate is cutting government spending. government doesn't create resource, larry, it redistributes them. every dollar they spend for one person, they take away from another person. it's an awful way to do it. >> by the way, back in 1937, just to set the record, you are dead right the corporate tax was hiked again. the capital gains tax was hiked
again and on top of that, the federal reserve did tighten the monetary spickets. >> it did. it will be for better or worse. i happen to be with them at the moment. as we talked earlier, i think the tax hikes are not coming. >> no, they're no. the irs scandal guarantees those tax hikes won't make it. they shouldn't have made it on logical economic grounds, political ground, when i listened to howard dean a minute ago, i was in the nixon white house from '70 to '72. everyone was saying exactly that howard dean said in your last segment. this is a real problem. now, it may not go to the same level. it is a real problem. it guarantees us from getting really bad legislation. >> so, okay. if we have monetary accommodation and spending as the share of gdp keeps coming down, spending, right, we don't want the tax hike. >> spending.
>> that's a source of stimulus for the economy. it's the reverse of what they are say zblk yes, that's exactly right. the reason we are having any recovery at all is government spending is a share of gdp is coming down. it's coming down really fast, larry. it will continue to come down as all that stimulus spending finally goes away. that will bring it down to the normal levels. that's what i'm hoping will happen. >> the sequester is a good thing. it's a good thing. it may not be perfectly executed. on a whom, it's a good thing. >> it's a great thing, larry, i wish we could sequester all the automatic programs as well. that would be really terrific. >> actually, you've had two big spending cuts, one in 2011. then the sequester comes here in 2013. so they chopped off. >> it's great. >> $2 trillion plus and you noted all that phony garbage stimulus is finally running off.
>> we have a house with a huge deficit we have to address and deal is with in the. if you are you right, it's coming down. we will come back to some new normalcy. i'm happy about it. >> good stuff, art laffer, you have been great tonight. we thank you very much. i enjoyed these complicated questions. thanks for watching. you are listening to dr. lafr, a good exam of free markets on the supply side, pro growth, folks, it's what i want. i'm kudlow, we'll see you monday. nope eeeeh... oh, guys let's leave the deals to hotels.com. ooh that one! nice. got it! oh my gosh this is so cool. awesome! perfect! dad to the rescue. the perfect place is on sale now. up to 30% off. only at hotels.com since aflac is helping with his expenses while he can't work,
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